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New Relic raises $10M to sniff out underperforming cloud computing apps

New Relic, which provides a web-based application monitoring service, announced today that it has raised $10 million in its third round of funding led by Tenaya Capital.

New Relic gives companies a way to monitor cloud applications running in real-time to find any bad apples that might be slowing down other web-based services running on Amazon’s EC2 and Rackspace cloud infrastructures. The service targets specific web pages or pieces of code — like a SQL query — that might be slowing a site down and reports it to New Relic users. The company also announced today it is bringing support for applications run in Microsoft’s .NET architecture and PHP for its monitoring service.

Because New Relic is hosting all of its computing power in-house, it’s able to handle the load required for cloud app monitoring with a lower overhead than it would have if it relied on a cloud infrastructure for its processing, said New Relic CEO Lew Cirne.

“We’re continually watching this and providing this depth in Data 24/7 but only at 2 to 3 percent overhead to the site,” he said. “That’s the kind of deep visibility the developers crave to solve production problems.”

New Relic has experienced about 200 percent growth year-over-year growth, and Cirne expects the company to become cash flow positive without having to raise the $50 million that other web-based software-as-a-service companies need, he said.

“The reason why we’re so much more efficient is because our product is so strong that it does 80 percent of its selling to convert the product value into revenue,” he said.

The San Francisco, Calif.-based company was founded in 2008 and raised $3.5 million in its first round of funding and $8 million in its second. Alan & Company also participated in its most recent fundraising round, as well as existing investors Benchmark Capital and Trinity Ventures. It currently has 32 employees and about 3,000 clients including AT&T, Fox Interactive Media and Thomson Reuters, Cirne said.

[Photo: waffler]

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